The retail environment across the world has experienced an acceleration in digital commerce as consumers shift buying habits to online, amid Covid-19 related stay-at-home orders and global lockdowns.

With nearly everything bought online, from groceries to gardening supplies, an additional $900-billion was spent online globally last year, providing a much-needed lifeline for retailers, restaurants and other businesses large and small as in-person consumer spending was disrupted.

The rapidly growing ecommerce segment accounted for about $1 out of every $5 spent on retail during 2020, up from $1 out of every $7 spent in 2019, Mastercard’s latest ‘Recovery Insights’ report shows.

“While consumers were stuck at home, their dollars travelled far and wide thanks to ecommerce,” says Mastercard chief economist and Mastercard Economics Institute head Bricklin Dwyer.

Consumers increased their ecommerce footprint, buying up to 30% more from online retailers and making purchases from a greater number of websites and online marketplaces than ever before.

In South Africa, consumers are supporting their favourite local small businesses, with 63% saying that they are making a conscious effort to shop online at these stores.

However, only 20% to 30% of the Covid-19-related shift to digital, globally is expected to be permanent.

“New habits are hard to form, but throughout 2020 and now into 2021, consumers have become accustomed to buying more food and other goods online. When economies reopen, we can expect an over-rotation back to in-store purchaseses and then a stabilisation in the shift to digital,” the report points out.

The unprecedented personal and economic upheaval caused by Covid-19 accelerated already existing trends, including the growth of online shopping, an increase in the globalisation of consumer spending and a shift towards touch-free electronic payment experiences.

While the digital transformation has been neither universal nor consistent, owing to geographical, economic and household differences, the report uncovers several key overarching trends.

Larger Gains

Economies that were more digital before the crisis, including the UK and the US, saw larger gains in the domestic shift to digital, which could potentially be more permanent than the countries that had a smaller share of ecommerce before the crisis.

This will have significant implications and provide continual benefits for the countries and companies that have prioritised digital and were digitally ready prior to the pandemic.

In the Middle East and Africa, the ecommerce share of retail sales before the crisis was 2.2%, rising to 4.6% at the peak of the crisis. The current level stands at 2.4%.

“Our analysis shows that even the smallest businesses see gains when they shift to digital,” says Dwyer, noting that the companies are now heading into a strengthening economic environment with the experience gained from a challenging year.

Essential retail sectors, which had the smallest digital share before the crisis, experienced some of the biggest gains as consumers adapted.

“With new consumer habits forming, and given the low preCovid-19 user base, we anticipate 70% to 80% of the grocery ecommerce [segment] surge to stick around for good.”

The Mastercard study on consumer spending reveals that 68% of South African consumers are shopping more online, with 54% buying groceries online since the onset of the Covid-19 pandemic.